Allied warns it may yet default on debt

Allied told the stock exchange it was due to repay the loan from the sale of an asset next month, but had received a request for immediate repayment.

If an extension was not granted, it said, "that would result in an enforceable event of default under ALF's secured loan facility".

The company did not give further details and chairman Garry Bluett did not return calls seeking comment. The implications of a default are not clear but in other situations it can allow a creditor to appoint receivers.

Yesterday, Allied belatedly published its annual report, revealing its auditor, PWC, was uncertain the company qualified as a going concern.

In his report, Bluett noted the company's loss of $14.1 million for the year to June was mainly caused by further writedowns of $9.3m on assets acquired from failed finance companies Hanover and United in December 2009.

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At the time, Hanover and United's loan and property assets were said to be worth $396m.

The deal gave the finance company's debenture holders 97 per cent ownership of Allied in exchange for their stock.

However, those assets have since been substantially written down, decimating the holdings of Hanover and United investors.

At yesterday's closing share price of 2.8c, Allied had a market value of $2.5m.

At balance date, Allied owed $17m to its former subsidiary Allied Nationwide Finance, which is now in receivership. Fairfax NZ